What does the settlement mean?
The settlement is an agreed-upon plan for ending the bankruptcy. If the settlement is approved, PG&E will fund a trust for Wildfire victims and certain public entities, for $13.5 Billion. All victims’ claims against PG&E will be converted to a claim against the trust fund. PG&E will be allowed to exit bankruptcy and move forward with its business with no further liability to victims. Each victim’s claim will satisfied solely through the trust that PG&E funded.
How much will each claimant get from the trust fund?
The settlement does not resolve any individual claim. The amount each victim gets will depend on the victim’s specific loss and the proof that their lawyers provide in the legal proceedings that have, until now, been put on hold because of PG&E’s bankruptcy.
Is $13.5 Billion enough to pay everyone?
We don’t know yet because the claims filed to date have not yet been evaluated. We do know, however, that far fewer wildfire victims have filed claims than was anticipated when negotiations began. At this point, there is no reason to believe the fund will be insufficient.
Why couldn’t we get more than $13.5 billion?
Our financial analysis concluded that this fund is the largest that PG&E could raise and survive as an ongoing business. The alternative – forcing PG&E out of business and selling off its assets – is called a “liquidation.” In a liquidation, PG&E’s other creditors would be paid first and victims would get less, if anything at all. In short, allowing PG&E to stay in business provides to victims the most compensation.
I’ve heard half the fund is going to be in PG&E stock. What good is stock in a bankrupt company?
The fund will take stock in the new company that emerges from bankruptcy. The stock will be valued based on the new company’s assets and projected income stream. We believe that the stock to be deposited into the trust will be fairly valued.
But don’t victims need cash?
No victim will be required to accept stock in settlement of his claim. The trust will sell stock to pay claims in cash as required. The stock is only a mechanism to fund the trust.
What needs to happen for the bankruptcy deal to be approved?
The governor must approve the plan. To do so, he must satisfy himself that going forward PG&E will be economically viable and that it can operate safety. The CPUC must approve the plan from a regulatory perspective. The wildfire victims must approve it. And the bankruptcy judge must approve the plan as not being unfair to PG&E’s other creditors.
How long will it take for the plan to be approved and the trust funded?
We are hoping for March or April.
When will the victims be paid?
Once it is set up, each victim may proceed to trial against the fund, just as he or she could have against PG&E. That process could be lengthy. One aspect of the agreed upon plan, however, is that it will allow claimants to obtain expedited settlements so they don’t have to wait as long as a trial might take. In fact, allowing victims a way to obtain cash settlements more quickly was a key term during the bankruptcy negotiations. The procedures for quicker settlements has not yet been finalized. We are hoping, however, that the first payments to claimants who use the expedited (quicker) settlement procedures will be made in a matter of months after the plan is approved and the trust funded, rather than years as might be expected otherwise.